In this special Making Sense edition of Ask The Headhunter, Nick shares how he feels about the popular site LinkedIn and job boards more generally. LinkedIn, CareerBuilder and Monster declined to comment. Next week, he’ll return to providing insider advice and contrarian methods about winning and keeping the right job, on one condition: that you, dear Making Sense reader, send Nick your questions about your personal challenges with job hunting, interviewing, networking, resumes, job boards, or salary negotiations. No guarantees — just a promise to do his best to offer useful advice.

You’re a job seeker. You pay LinkedIn $29.95 per month for a “Job Seeker Premium” membership so that, when you apply for jobs, you can artificially “move your job applications to the top of the list as a Featured Applicant.” But the employer sees a “badge” beside your name and knows you paid for the position. Do you feel a little slimy for doing it, or wonder what the employer thinks of you now? More to the point, did that 30 bucks pay off?

You’re an employer and you’re hiring. You pay LinkedIn $3,950 for 10 job postings to help you find the best, most qualified hires. When LinkedIn delivers job applicants, do you care that those at the very top of the list paid LinkedIn for their positioning — while possibly better, more qualified candidates who didn’t pay are pushed to the bottom? Do you care that you can’t even turn this “feature” off?

Double-Dipping

Whether you’re the job applicant or the employer, you’d probably feel cheated. Imagine LinkedIn was a headhunter who charged the employer to fill a job, but also took money from an applicant to submit her resume first. That’s called double-dipping.

Welcome to the “job board” model for recruitment advertising, where the middle man charges everyone and manipulates the database, and where matching qualifications to job requirements is way down on the list of concerns, right beside those poor “basic users” who didn’t pay to play.

(Clarification: Since I first wrote about this, LinkedIn has confirmed that you can pay to move your application to the top of the recruiter’s list when you’re applying for jobs that employers pay to advertise. When employers pay to search the entire LinkedIn database, LinkedIn says positioning is not for sale. So LinkedIn is double-dipping only some of the time.)

It’s no secret that once a job is filled, a job board like LinkedIn loses two sources of revenue: the employer and the job seeker. So a successful business model requires that everyone keep searching. Job board revenues go up when employers and job hunters keep returning to post and search, and when both pay to play.

Recruitment Advertising

In the old days, before the Internet, only employers paid to fill jobs. They bought ads in newspapers and magazines to solicit job applicants, and they paid recruiters and headhunters for help. Charging the job seeker was virtually unheard of, especially for skilled and professional jobs.

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In the 1990s, the economy tanked and everyone in the employment business scrambled to get revenue any way they could. Big outplacement firms, normally paid enormous fees by companies ($15,000 a head was not unusual) to help their downsized workers find new jobs, started charging fees to other companies that hired those same workers. Recruiting firms often started selling services to job seekers — resume writing, coaching, even the promise of a job when they had no control over any jobs — at the same time they were billing employers.

By the time the Internet came along, everyone was primed to pay fees for everything related to employment. The new job boards were making money coming and going. Ironic, isn’t it, that the hue and cry today is that there’s a great talent shortage, even in the midst of the biggest talent glut we’ve ever seen?

Could it be that the job boards and business networks — like LinkedIn — are not doing the job? Could it be that simple recruitment advertising has turned into a two-faced employment system that charges for lists of jobs and lists of people, without reliably delivering jobs or hires? Indications are that this is exactly what’s going on.

The Dirty Little Secret About Job Boards

My analysis of annual surveys by employment industry watchdog firm CareerXroads reveals that during the course of a decade in which job boards’ revenues exploded, the percentage of hires made through the boards decreased by about 50 percent.

Nick’s analysis of annual surveys from CareerXroads shows a decrease in the percent of hiring through job boards. Graph courtesy of Nick Corcodilos.

Monster Worldwide, the parent of one of the biggest job boards – Monster.com — generated almost $1 billion in revenues last year. It claims it offers employers access to more than 23 million job seekers. But careful analysis of CareerXroads’ survey results suggests that Monster.com was reported by employers as the source of all hires only about 1.3 percent of the time.

CareerBuilder, the other big job board, is co-owned by Tribune Company, Gannett Company and The McClatchy Company. CareerBuilder claims more than 24 million unique monthly visitors and says it “helps match the right talent with the right opportunity more often than any other site.” Yet employers reported to CareerXroads that they make only about 1.2 percent of all their hires via CareerBuilder.

CareerXroads has not included LinkedIn among job boards in its “source of hires” surveys, but when I asked co-founder Mark Mehler whether he and his partner Gerry Crispin think LinkedIn is a social network or a job board, Mehler said, “Gerry and I both believe it is both.”

So, is LinkedIn a job board? Of course it is. In spite of a marketing push to distance itself from its competitors, LinkedIn does what job boards do: Takes money to post jobs, warehouses resumes (profiles) from job seekers, sells employers access to those resumes and provides job listings to job hunters. [LinkedIn’s job listings](http://www.linkedin.com/vsearch/j) don’t look any different from **[Monster.com’s job listings.]( http://jobsearch.monster.com/browse/?sf=14 )* And *[LinkedIn sells job postings]( http://www.linkedin.com/job/consumer/commonPost/displayNewJob )* to employers almost exactly the same way *[Monster sells job postings.]( http://hiring.monster.com/recruitment-solutions/save-time-and-money-new-job-posting-plan.aspx )** LinkedIn even charges the same price to post a job as Monster.com — $395. (The two links to LinkedIn require that you log in to your LinkedIn account to view them)

The promise of online job boards is that algorithms help make good matches. The trouble is, employers complain they still can’t find the hires they need. Keep in mind that, according to Paul Solman’s Under/Unemployment Total, 26.2 million Americans are looking for full-time jobs while over 3 million jobs are vacant.

It seems that high-flying job boards like LinkedIn are actually in the business of selling you whatever you’re willing to pay for — and, nowadays, the employment industry is charging desperate job seekers and naïve employers alike.

Who’s the Dummy?

LinkedIn isn’t the only double-dipper on the profitable employment scene that takes money to manipulate who stands out when employers review job applicants.

Explains CareerBuilder: “Our resume database displays resumes by relevancy to the employer’s search.” You’d think that means the database matches people to an employer’s defined criteria to find the right people, and that CareerBuilder then delivers the most relevant resumes.

You’d be wrong. CareerBuilder’s “Resume Upgrade increases your relevancy score” without any changes to your qualifications. All it takes to manipulate the results of an employer’s search for the right talent is $150.

Who’s the dummy: the job seeker paying $150, or the employer paying thousands to get manipulated results?

Now let’s take a closer look at one Ask The Headhunter reader’s experience with LinkedIn.

Richard Tomkins: I received an e-mail from LinkedIn, with a vertical list of five or six firms and logos, suggesting that I could be interested in these jobs. One of them caught my attention and I applied. I simply clicked on the “View job” link, uploaded a copy of my resume, and clicked the submit button. Immediately, a very questionable pop-up appeared. For $29.95 per month, LinkedIn has offered to sell me an “upgrade” that will put me at the top of the results this employer will see when it searches the LinkedIn database for job applicants. I find this to be unethical and immoral. How about you?

When Richard Tomkins brought this to my attention, I had to see it for myself.

I found a LinkedIn e-mail in my Outlook mailbox about “Jobs you may be interested in.” (These are delivered automatically and frequently to free users of LinkedIn. They’re the bait.) I logged onto LinkedIn and applied for a job. This is the pop-up that appeared on my screen. (It’s the hook.)

After applying for a job on LinkedIn, Nick received this ad to boost his visibility to employers. Screen shot courtesy of Nick Corcodilos.

LinkedIn was ready to make me look like a top candidate without any consideration for whether my qualifications were better than any other applicant’s — if I forked over 30 bucks and agreed to ongoing monthly fees.

“Move Your Job Application to the Top of the Recruiter’s List!”

I couldn’t believe that LinkedIn was going to sucker an employer — who was paying thousands to find the best job applicants — by putting me at the top of the applicant list just because I paid for it.

(Tomkins got the exact same pop-up ad six months ago, listing the same #2 and #3 profiles beneath his own. He notes they are in the “San Francisco Bay Area,” thousands of miles from his own location. You’d think LinkedIn would gin up a pitch that at least delivers “results” that include “candidates” from the same geographic area!)

Could LinkedIn be taking money from job seekers and misleading employers with fake applicant rankings? Thinking that Tomkins and I had somehow gotten this wrong, I did what any LinkedIn user might do: I contacted customer service.

A LinkedIn representative, LaToya (no last name given), explained via e-mail that, if I pay the $29.95, the advantage “is that your at the top of the list rather than listed toward the bottom as a Basic applicant. [sic]”

But what about those other poor suckers, the Basic applicants, who ride free — and whose qualifications might be better than mine?

And what about employers — don’t they get upset when they see someone paid to get bumped to the top of the list of applicants? Another customer service representative, Monica, told me that, “Unfortunately, there isn’t a way for the employer to turn this off.”

So job seekers pay for top billing, and the employer knows the top applicants paid for their positions because their names are highlighted and have a little badge beside them. (Wink, wink! You paid, but employers know you’re not really the top applicant!)

This is today’s leading website for recruiting and job hunting?

The Dive from Classy Business Network into a Cheesy Job Board

In a CMO.com article I wrote, “LinkedIns And Outs For Reaping The Network’s Rewards,” it’s easy to see how LinkedIn made its reputation as the leading professional network online. It’s the best online database of resumes and professional profiles. But around the time the company went public, new management reached for quick revenues, filling a boiler room with telemarketers on heavy quotas. LinkedIn decided the best model to adopt was not innovation in the social space, but the churn-’em and burn-’em business model of the job boards.

The changes came quickly. In summer of 2011, we were treated to “LinkedIn’s New Button: Instantly dumber job hunting & hiring.” A user merely clicked an on-screen button which made it ultra-easy to apply to lots of jobs, making it clear that quality of fit was certainly not a top concern. This was truly silly job-board-class “innovation,” to be outdone only by the more recent, meaningless “endorsements” that accomplish little but generate enormous numbers of profitable clicks and traffic for LinkedIn.

But if this shift in business model was intended to impress Wall Street, Avondale Partners’ equities analyst Randle Reece doesn’t see the upside of LinkedIn turning into another job board. Reece explained:

“An exec of a big white collar staffing company told me his firm’s recruiters had found LinkedIn to be valuable mainly for candidate research — not recruiting. Too much wasted time, too low response rates. He said if LinkedIn settles into that niche, there’s less value added and much more competition.”

According to The Wall Street Journal, second-quarter sales for the company’s marketing-solutions and advertising business are up 36 percent. What’s more interesting is that sales of premium subscriptions — like the one that boosts your resume to the top of the applicant list — are up a whopping 68 percent to $73 million.

How is LinkedIn pulling this off? According to SEC filings, in 2010 LinkedIn had just 207 people working in sales and marketing. At the end of the last quarter, it had 1,822. Whether viewed by Wall Street or a casual observer, it seems that such extreme sales staff growth is not sustainable, and that it might even signal problems with the business model.

LinkedIn’s offer to move you to the top of the applicant list, if you pay, suggests LinkedIn’s reputation is in a race to the bottom of the highly competitive job-board business. (Well, maybe not the very bottom. That’s probably occupied by TheLadders, which is today defending itself in a New York District Court class action suit.) Even at the end of 2012, LinkedIn signaled pretty clearly that its transformation was complete (“LinkedIn: Just another job board”). Gone was the network and connect theme on the homepage, supplanted by job board advertisements. Every LinkedIn professional profile — once intended to promote high-quality networking — is now a resume to be rented to employers after LinkedIn charges job seekers for “special placement.”

LinkedIn seems less focused on helping its members compete for jobs based on their skills, qualifications, or even on the strength of their network connections — and inordinately focused on conditioning its members to pay to get employer’s attention with cheesy badges, yellow highlights around their names, and paid positioning on applicant lists.

The Lance Armstrong League

But let’s get back to Richard Tomkins. LinkedIn recently awarded him a “blue ribbon” because his LinkedIn page is “in the top 10 percent of the most viewed entries.”

Tomkins is upset:

“If I am in the top 10%, it’s not translating into more interviews, let alone a job. 20 million people got this award? That’s the size of a big city or a small country. Should I laugh or cry? What significance does this really have to me? I was okay with their business model, up to the point when they became a job board. If your name is at the top of the list only because you paid for it, that puts you in the same league as Lance Armstrong.”

Then Tomkins speculates about the “pay for positioning” deal and guesses at how the professional network’s business model is likely to evolve in the future:

“What if three different applicants — all with premium accounts — apply for the same job? Who gets to be on top? Maybe they have another pop-up stacked up, one that offers the user a premium-plus-plus, extra-premium account for $300.”

Is a sucker “endorsed” every minute?

LinkedIn started out as a credible business network that became the business network online — and potentially the standard-bearer for professional identity integrity. Since it started selling recruiting and job seeker services, it seems LinkedIn has slid down the slippery slope of inconsistent, questionable offers and business practices. A generous explanation is that one hand (LinkedIn marketing?) doesn’t know what the other (LinkedIn product management?) is doing.

But the question for everyone else is, why are employers (who pay to access the database) and job seekers (who pay for database positioning) playing along while LinkedIn sells everyone out with this game of payola?

And where does it leave LinkedIn users who just want to meet one another to do business? While some of us are working to help job seekers form appropriate, substantive relationships that they can cultivate — and benefit from — over time, LinkedIn keeps coming up with silly products that cheapen the meaning of networking and connecting with other people.

This seems contrary to founder Reid Hoffman’s original vision. LinkedIn is not innovating as a professional network. It’s become a job board that’s marketing relationships as commodities you can buy, while it pretends real reputations come from members throwing “endorsements” at people they don’t know — which seems about as useful as the old Facebook practice of “throwing sheep” at your online friends.

Robyn Feldberg is an executive resume writer at Abundant Success Coach who also creates LinkedIn profiles for her clients. Her comments underline the reputation train wreck LinkedIn seems headed toward:

“I didn’t like it when CareerBuilder.com offered its premium placement service, and I don’t like that LinkedIn has resurrected this deplorable practice… I understand that LinkedIn is a business with expenses and that they need to make a profit, but in my humble opinion, this is going to do nothing but hurt their reputation and eventually their bottom line. Relationships are built on trust, and you simply can’t trust a company that engages in unethical business practices, and yes, I think this is unethical.”

If a client paid me to fill a job, and if the top candidate I delivered to the client was one who paid me to submit her resume first, I’d be cheating. That’s unethical. LinkedIn, what kind of headhunter or recruiter are you?

The Employment Crisis: It’s Not Just the Economy, Stupid

As I’ve written often in the past, I believe the automation of recruiting, job seeking and hiring has exacerbated America’s employment crisis. Online forms and tools like the “apply with LinkedIn button” make it too easy for the wrong applicants to apply for jobs, and harder for employers to find the right ones. But when a job applicant’s position on the stack of resumes can be bought, the search for the best-qualified candidates is even further compromised, and so is our economy.

America’s jobs crisis needs to be looked at as a failure of employers and job boards to ensure an accurate and fair employment process. Blaming unskilled and improperly educated job seekers is a fool’s errand, as Wharton researcher Peter Cappelli demonstrates in his book, “Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It.” The talent is out there; it’s just getting lost in a system that employers have permitted to supplant more sound, accurate recruiting methods and their own good judgment.

Everyone from employers to job seekers to the U.S. Department of Labor should be scrutinizing the mechanics that control recruiting, job seeking and hiring — and how these systems contribute to the employment crisis.

Readers: Have you paid LinkedIn to boost your job application to the top of the list, and for “premium” standing? Does it pay off? If you’re an employer, how do you feel about paying to view applicants who in turn paid for their position on the list? Is this an acceptable new standard of recruitment advertising?